Progeny Evolves Beyond Distribution Model - page 3

The Reports of Progeny's Demise...

October 17, 2002

By
Brian Proffitt

In the recent past, any company that wanted to implement Linux on a
device that would later be sold at market would have one of two
choices: try to use a stock Linux distribution as is or take an
existing distro and modify it to meet their needs. Essentially,
therefore, creating their own distribution. Murdock's assertion is that providing Linux as a
ready-made platform for such a business gets around this problem.

"The platform is for businesses who don't want to get into the
distribution business," Murdock said.

Murdock cited the Google Search Applicance as an example of a company
that could have benefited from the Platform Services approach. What
Google did was modify Red Hat Linux to their needs. If Google had come
to Progeny, Murdock said as a hypothetical, Progeny could have
provided the mega-search firm with a tailor-made Linux platform upon
which Google could have built their technology.

Linux has a lot of positives working in its favor as a platform,
Murdock said. There's no chance of vendor-lock, the code is open
source, intellectectual property issues are virtually non-existent,
and Linux is already a time-tested OS.

Holding up his two-way pager/PDA device, Murdock mused that when such
devices have an OS with a proprietary license, the cost of the OS
severely cuts into the profit margin for the manufacturer. The amount
of profit generated from each unit sold is nil when using a
proprietary embedded OS. The manufacturers are compelled to generate revenue from
other sources, such as services.

"Using Linux," he said, "allows companies to make money on products,
not services."

What Platform Services will do, therefore, is take the best parts of
Linux, whether it's whole distributions or just the bare essentials of
Linux--whatever the customer needs to implement their own technology.

Currently, Platform Services is modeled on a subscription fee
system of revenue, which is not tied to the number of end units sold.

Murdock hopes that this will soon evolve into a
more end-to-end model, where Platform Services will have more of a
subscription-based model as Progeny will assist the customer from
initial development, to deployment, and even to maintenance, if need
be.

"My hope in moving toward an end-to-end model down the road
is that we can derive revenue based on the number of units
deployed, rather than the number of units sold, the traditional way to derive revenue from software," he explained.

Platform Services already has one big-name customer to its credit: HP
has utilized Progeny's new service to create an effective programmer's
toolkit that HP's developers can use to more effectively develop apps
for Linux.